A SPATIAL MODEL OF OPTIMAL WATER CONVEYANCE

Most water projects suffer from losses in conveyance. Because conveyan ce has public good characteristics, investment in reducing conveyance losses must be provided by a central authority. This paper develops a spatial model to determine optimal conveyance investment, water alloca tion, and investment in firm-specific conservation technology. The eff iciency and distributional characteristics of the optimal solution are compared to projects with (i) well-developed water markets and (ii) s patially uniform water prices, both with sub-optimal conveyance. A num erical illustration is provided. (C) 1995 Academic Press, Inc.